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Licensing Solar Power

Power purchasing agreements allow universities to harness solar power without large capital outlays. Two schools share their insights about the benefits and how to set one up right.

By Jennifer Demski

04/23/13

The University of San Diego positioned its solar panels to maximize energy production while minimizing the impact on its Spanish Renaissance architecture.

The University of San Diego and Point Loma Nazarene University are licensing the sun. Both California schools are generating solar power on campus without having to sink large amounts of capital into equipment and installation. By negotiating power purchasing agreements (PPAs) with Amsolar and Perpetual Energy Systems, respectively, the schools buy the solar energy generated on campus through equipment owned and maintained by these companies.

Typically negotiated for terms of 20 to 25 years, PPAs are making renewable solar energy a feasible option for budget-strapped colleges and universities. Campus Technology recently spoke with Alexandria Bennett, PLNU's sustainability coordinator, and Michael Catanzaro, USD's director of sustainability, about the key benefits of PPAs and the critical factors to consider before signing an agreement.

Key Benefits1) Fixed Utility Costs. PPAs specify the cost per kilowatt-hour of energy produced by the solar panels over the term of the contract. This offers a level of predictability not available for electricity purchased through traditional utilities, whose prices can fluctuate between 10 and 15 percent from year to year.

"The fact that we could negotiate a set escalation rate for our solar power over the 20-year term was really attractive to our finance team," explains Bennett. "At the beginning of the contract we'll pay a little bit more per kilowatt-hour than we pay for traditional electricity. But, because the escalation rate is much lower than what we predict the utilities' escalation rate will be, we'll definitely save money over time."

2) Cost Savings. For some schools, however, the cost savings are immediate.Even though USD's traditional utility costs have gone down since signing its PPA, the power generated by the school's solar panels is still 2 to 3 cents cheaper per kilowatt than what it pays for energy through its local utility. "The solar PPA provides substantial cost savings with little risk to the university," remarks Catanzaro.

3) Turnkey Installation and Maintenance. At USD, Amsolar handled the placement and installation of all the solar panels. Equally important, it negotiated with the local utilities to ensure that USD didn't incur any fees or penalties for supplementing their grid with solar power. "They basically installed a turnkey system, so all we had to worry about was purchasing the electricity from them," explains Catanzaro. "They took care of every other piece of the equation, which is really attractive to most universities, because we don't typically have the technical competence to operate and maintain our own solar power system."

Once the system is installed, it's in the vendor's self-interest to ensure that the equipment is well maintained and operating at full capacity, since the university is purchasing the power generated by the panels. "The fact that the maintenance and monitoring of the equipment was included in the agreement was very attractive to us," remarks Bennett. "As a small institution, we would not have had the capacity to closely monitor the system to make sure it's performing."

Key Considerations1) Local Utility Fees and Penalties. A vital task of any PPA arrangement is determining how many solar panels will be placed where, and the configuration of the campus power grid will have a significant impact on these calculations. At USD, for example, many of the buildings on campus share meters, so any excess electricity generated by the solar panels on a building goes into the campus power grid, thereby reducing the amount of energy that needs to be purchased from the local utility. A setup like this requires careful calculation on the part of a school, however: Depending on state regulations, generating too much solar power can trigger a fee from the local utility. "When we installed the system, California had a cap on how much renewable energy could be produced on-site before having to pay a disconnect fee to the local utility," explains Catanzaro. Since USD's solar installation produces only 7 percent of the school's total load, however, the school was never in danger of exceeding the cap.

2)Calibrating the Right Amount of Power. Point Loma's coastal campus had a different, equally complex set of equations to solve. Because each building is on its own meter, the school had to be very specific when calculating how many solar panels were needed to serve each building at peak times.

"If we designed a system that generated more power than the building used, we would not be able to capitalize on the benefits of that overproduction," explains Bennett. "We pay for any power that we produce on the panels, so financially it wouldn't make sense for us to overproduce."

Conversely, certain buildings had the capacity to use more solar power but couldn't physically house additional panels. In these situations, Perpetual Energy Systems put panels on carports that fed into the buildings' meters. "The great part about the carport solar, which we didn't even consider initially, is that it provides your campus with so many more benefits," explains Bennett. "You now have premier, shaded parking. And we were able to put lights underneath the solar panels, so you have a much safer parking lot in the evening."

3)Panel Placement. As part of its work at Point Loma, Perpetual Energy Systems conducted an analysis of the campus buildings to determine which were best positioned to generate solar power. But factors beyond maximizing the panels' sun exposure must also be taken into consideration. At Point Loma, for example, the municipal codes place restrictions on building heights. The initial designs for panel placement on several buildings exceeded this limit by 6 inches, forcing Perpetual Energy Systems to come up with workarounds.

Another important factor is the comfort of people on campus. "I suggest that a university look at where the inverter is located," counsels Bennett, referring to the component that converts the energy from direct to alternating current. "At one location, the inverter was right outside a student's window. The sound of the inverter has a distinct pitch which can be bothersome to some people, so we actually had to build a concrete barrier around it to dampen the sound."

At USD, the placement issues were more aesthetic in nature. "We have Spanish Renaissance architecture on our campus, so there was a real concern about seeing a bunch of solar panels sticking out of the tops of these beautiful buildings," says Catanzaro.

Amsolar offered low-profile solar panels and provided drawings and specs to the USD team to ensure that the visual impact on campus wouldn't be an issue. Residence halls and the Jenny Craig Pavilion became solar power hubs due to their large, flat roofs. "We had to say no to some locations where, frankly, the solar panels would've looked silly," says Catanzaro. "There are just certain buildings that you don't want to see overwhelmed with solar panels."

Does a Microgrid Make Sense on Campus? By Stephen Schneider

As schools look for ways to secure access to affordable, reliable electricity--preferably with a renewable component--facilities managers are considering the possibilities of microgrids. A microgrid is just what its name implies: a small electric grid. But it goes beyond the traditional utility electric grid by bringing together local power generation, renewable energy, local operations--even electric vehicles.

Unlike traditional grids, microgrids can easily integrate power generated by local and renewable sources (such as solar, wind, biomass, and natural gas), connect directly with electric vehicles for battery backup, and tend to be more reliable since they utilize multiple power sources. In fact, when the power goes out on the traditional electric grid, a microgrid can "island" to restore power and provide backup.

This is exactly what happened at the University of California, San Diego during a citywide blackout in September 2011. Because UCSD has a microgrid that provides 90 percent of the power needed by the institution, the school was able to maintain power.

Indeed, UCSD's microgrid has been such a success that the school received a grant of more than $1.8 million from the California Energy Commission this January to develop its microgrid as a model for the rest of the state.

But, without millions of dollars in grants, is a microgrid a realistic technology investment for a campus? If the microgrid contains an energy-generation component (such as distributed solar power), a school may be able to fund it via a long-term financial agreement known as a utility service agreement. Similar to a power purchase agreement, a USA wraps the cost of generation, energy efficiency, real-time commissioning, system optimization and other energy-control techniques into an operating expense. Bottom line: With a microgrid, the campus pays less for energy, reduces usage, receives greater energy value, and incurs no upfront capital costs--and potentially no impact to the balance sheet.

Stephen Schneider is vice president and chief solutions architect at SAIC.